What if your clients say they have life insurance coverage through an employer?Article added by Darryl Marshall on August 15, 2012
Ranked: #1483 (91 pts)
As you sell life insurance to your clients, one of the common objections you may hear is, "I already have coverage through my employer." So how can you overcome that objection?
As we work through the aftermath of the financial crisis in the United States, our clients continue to feel the pressure of deciding how much money to save, how much to spend and where to spend it. As insurance professionals, you know that life insurance plays a key role in protecting clients and their families and truly is a required expense, but how do you convey that to consumers?
A detailed analysis of self-reported financial objectives revealed that Americans typically have just 49 percent of the financial protection they need in order to achieve their financial goals for their families.
This life insurance gap exists despite the fact that more than 80 percent of American breadwinners feel they have enough life insurance coverage, and translates into a median shortfall of almost $300,000 in coverage for the typical American family.
As you sell life insurance to your clients, one of the common objections you may hear is, "I already have coverage through my employer." This may be true, but most clients don't realize that it may not be enough. A typical American holds about eight different jobs between the ages of 18 and 32, and recent research shows that 85 percent of American workers expect to be employed by a new company within 12 months. As such, their coverage can change dramatically over time, depending on their employment situation, resulting in unstable coverage for them and their family.
So how can you overcome that objection?
That coverage may not be portable
The unemployment rate in the United States is more than 9 percent; in some states, such as Florida, the rate is more than 12 percent. Many of today's unemployed felt that they had adequate life insurance coverage from their employer. They also didn't realize that when they left the company, in most cases, that coverage did not go with them. Some company plans allow for the insured to continue coverage, but most limit the portable amount, and generally, the cost of coverage will increase significantly and no longer present an affordable option. As a result, the client doesn't have enough coverage or doesn't have any coverage, or the coverage they do have is too expensive.
When the cost becomes significant and the income stops coming in, many clients begin to feel that life insurance coverage is no longer a necessity that they can afford, and in turn, they lapse the coverage, leaving them with nothing.
That coverage may not fit their future needs
Obtaining additional life coverage can protect your clients from unforeseen changes in health. We have seen many of our clients procrastinate when obtaining life insurance coverage, to the point that they realize they need and want it, but cannot obtain it as a result of significant health changes. That health change becomes the catalyst for them to seek out coverage, and we then have to inform them that because they waited, they will not be able to obtain coverage, they will not be able to obtain enough coverage, or coverage is no longer affordable. Many of these clients were under a false sense of security, feeling that the coverage they received through work would be there forever.
That coverage may cost you even more over time
Life insurance coverage provided by employers can be automatically deducted from the employee's paycheck; as a result, most employees don't realize the cost of that coverage. They also don't realize that each year the cost of that coverage increases as they age. For younger clients, this increase may not be noticed; however, as people work longer and retire later, they can see significant annual cost increases over their lifetime. In addition, group coverage doesn't offer credits or reduced costs for good health.
Everyone in the same age range pays the same rate, regardless of factors such as weight, medications, or impairments. When your clients apply for individual life insurance coverage and work through the underwriting process, the better their health, the lower the mortality risk, and thus the lower the premium. As a result, many clients don't realize that there are other cost-effective life insurance coverage options available.
As our clients are faced with the challenges and stress of watching where each dollar goes, they may feel more secure with the life insurance coverage that their employer provides, but they may not be as secure as they think they are.
In all life insurance planning, clients should not rely on their employer coverage alone. It is up to you to help them understand the potential pitfalls of this approach and to overcome their objections.
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